Answer:
$1,310 million
Explanation:
The computation of the stock value as per the gordan model is as follows:
Value = (FCFF × (1 + growth rate)) ÷ (required rate of return - growth rate)
where,
required rate of return or WACC is
= Cost of debt × (1 - tax rate) × weight of debt + cost of equity × weight of equity
= 12.5% ×(1 - 0.35) × 800 ÷ (800 + 400) + 22.5% × 400 ÷ (400 + 800)
= 8.125% × 800 ÷ (800 + 400) + 22.5% × 400 ÷ (400 + 800)
= 8.125% × 66.67% + 22.5% × 33.33%
= 12.9167%
Now the value is
= ($66 × (1 + 0.075) - (12.9167% - 7.5%)
= $1,310 million
Answer:
Finished goods inventory final balance= 12, 495
Explanation:
PRODUCTION COST COMPONENTS
- Direct materials 12,385
- Direct work 10,600
- Lease and utilities 9,600
TOTAL PRODUCTION COST = 32,585
TOTAL UNITS PRODUCED = 6,650
UNIT COST= (Total Production Cost / Total Units Produced) = 32,585 / 6,650 = 4.9
FINAL GOODS INVENTORY = (Total Units Produced – Total Units Sales) = 6,650 – 4,100 = 2,250
FINAL GOODS INVENTORY AMOUNT = (Final goods Inventory * Unit Cost) = 2,250 * 4.9 = 12,495
<span>Gregory's rules of thumb, which he uses in decision making, are known as heuristics.
Heuristic refers to a solution to a problem - it is something you employ in order to achieve the best results possible. These methods you use may not be perfect, but they will help you do what you intended to do properly.
</span>
Answer: a. there are no incentives for Beta to engage in international specialization and trade with Alpha.
Explanation:
Beta can produce 16 oranges or 4 apples in an hour. This means that for every Apple they produce, they can produce 4 oranges;
<em>4 apples : 16 oranges</em>
<em>1 apples : 4 oranges</em>
This is the same terms of trade being offered to them by Alpha because if they sell 1 apple to Alpha they will get 4 oranges. This is the same thing they will get when they are producing for themselves alone.
An incentive would have been them getting more oranges per apple than they can produce on their own if they sacrifice one apple which is not the case. There are simply no incentives for Beta to engage in international specialization and trade with Alpha.